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Consumer-facing businesses subject to more than 2 in 5 class actions
New research from Allens shows that having a consumer-facing business is the biggest indicator of class action risk.
Jerome Doraisamy
In its Class Action Risk 2020 report, global firm Allens identified that businesses that are consumer facing are at greatest risk of being subjected to class actions.
Emerging areas of risk found in the report included: class actions arising out of data breaches based on allegations of negligence, breach of contract and/or misleading or deceptive statements, climate change with claims based around a failure to disclose the potential impact of material business risks including risks associated with not lowering carbon emissions and/or the costs associated with making the transition to lower emissions, as well as corporate governance where claims are based on alleged inadequacy in a company’s corporate governance processes and/or failure in internal systems.
Reflecting on the findings, Allens partner Jenny Campbell said: “We have seen numerous claims arising from issues exposed during the financial services royal commission. We expect class actions inspired by royal commissions or other regulatory actions to be a long-term trend.”
“An increase in employment claims has also been reported – now accounting for almost 15 per cent of claims. Issues such as whether workers are employees and entitled to the benefits of an employment relationship and claims about working conditions, underpayment of wages and illness/injury sustained at work,” she said.
Moreover, the drivers of class action risk are changing, Ms Campbell continued.
The research follows last week’s announcement by Attorney-General Christian Porter that a new parliamentary inquiry will explore whether or not Australians “are receiving their fair share” from class action settlements, in the wake of the “booming litigation funding industry”.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly and HR Leader. He has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. In June 2024, he also assumed the editorship of HR Leader. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
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